Economic growth in the European Union is expected to be lower than previously estimated, according to the European Central Bank president Wim Duisenberg.

Duisenberg blames rigid labour markets for the slow growth

In a speech to an Italian economic forum, Mr Duisenberg said there was "considerable uncertainty" about short-term growth in the euro, and as a consequence earlier estimates of between 2% and 2.5% growth may be to optimistic.

Labour laws in eurozone countries were described as "among the most rigid in the developed world", Mr Duisenberg said.

This, along with generous social benefits, hampered economic growth, he said.

Mr Duisenberg's comments confirmed concerns that the economic slowdown in the US is spreading ever faster across the world.